The objective of this project is to determine how physician organization influences the cost, use and outcomes of health care. The organization of physician practice has been changing over the last two decades. Physicians have been forming larger groups and developing more integrated relationship with hospitals. The Affordable Care Act, with provisions promoting Accountable Care Organizations and other types of bundled payments, has accelerated these developments. While strong evidence exists that larger organizations charge higher prices due to their greater market power, the evidence on the effects of physician organization on the cost, use and outcomes of care is weaker. The project has the following 3 aims: 1) To determine whether physician practice size affects the cost, use and outcomes of health care, 2) to determine whether physician practice composition (single versus multispecialty groups) affects the cost, use and outcomes of health care; and 3) to determine whether the effects of physician organization, both group size and composition, on the cost, use and outcomes of health care vary depending on the incentives the organization faces. We will achieve these aims by analyzing the relationship between physician practice characteristics and patterns of health care use for Medicare beneficiaries enrolled in traditional Medicare (TM) and Medicare Advantage (MA) plans. Building on methods we have developed in our previous research, we will characterize physicians based on the type of organization in which they practice. We will then link these measures of physician organization to measures of the cost, use and outcome of care derived from insurance claims for Medicare beneficiaries enrolled in TM and MA plans. In addition to providing some of the first evidence based on national data on how physician group practice influences health care use, the analyses will address key issues regarding the effectiveness of different types of group structures (single versus multispecialty) and whether the effects of group organization are contingent upon the incentives facing providers. This type of evidence is essential for policymakers evaluating the potential consequences of policies promoting integration among health care providers and for practitioners seeking to understand the effectiveness of different organizational forms.